Transcript Interswitch Presentation

iuiio
Perspectives on Innovative Opportunities
to Hasten the Nigerian Economy via
Electronic Means
Outline
1
Benefits
2
A Case of 2 Systems
3
How to Achieve the Adoption of E-Payment
Technology - Government
4
How to Drive E-Payment Adoption – Financial
Services
Little Leaks Sink Ships
A Case of 2 systems
3
Card Payments
- Benefits Cardholders
Cash
Banks/Govt.
variable
transaction
costs.
Cost
The convenience of being
able to access cash at an
ATM or conduct a
transaction at a POS
terminal with a card
clearly has an impact on
economic growth.
Immediate
Access to Cash
Visibility of
transaction
processing
Financial
Management
Reduced cost of
labour, material,
accounting
Decreased
Transaction costs
Variety of
Payment
Options
Why Card Payments ?
Online Realtime Cash
Management
Faster Dispute
Resolution
Cards
Fixed
Upfront
costs.
Cost
Txn.
Vol.
The greater the volume of
transactions, the lower
the average cost per
transaction.
A Typical Payment Process
General
Purchase
Write
cheque
Review and
file invoice
Order
Track
Accounts
Several
Signatories
Budget
Raise
Approval
Reconcile
Transaction
Adjust
4-10
Budget
Processes
7days – 3mths
Direct Labour
A Card Payment Process
Update budget
automatically
Make payment
online
Invoice Detail in
Accounting System
2-4
Processes
10 mins – 1 day
Direct Labour
Route & Sign
approvals
electronically
Card Payments
- National Benefits Iceland A Case Study:
A majority of transactions in Iceland are made using payment cards, not cash.
Average cost of a cash txn = US $2.57
Total cost of the cash system = US $18.5 million.
Average cost of a card txn = US $0.61
The total cost of their card system = US $23.9 million.
Cash is 4 times higher than cash
Had Iceland used only cash it would have cost
Iceland $100.69 million vs $23.9 million
An extra $ 76.79 million in Savings
How much are we loosing ?
However there is a wide divergence in the rate of adoption of electronic payments. Customer Uptake is marginal
Source: “The Costs of Cash and Cards Compared, The Cases of Iceland and Belgium,”
De Grauwe, Paul, Erik Buyst, and Laura Rinaldi, University of Leuven, 2000.
An electronic payment system generally costs in the range of one-half to one-third of a paper-based system. This
translates into a beneficial aggregate cost savings of at least 1% of GDP. (Source: Global Insights. Inc)
How can I drive
e-payment Adoption
(Government)
8
SmartGOV.IGR Features
Trends To Watch
o Convergence of products/
networks
Product
Trends
o Rapid evolution driving
down costs enabling new
products and forms of
distribution
Consumer
Customer
Trends
Technology
Trends
Payments
Business
Regulatory/
International
Trends
o Elimination of regulatory
boundaries (Universal Banking)
o Cross border opportunities
Competitor
Trends
o Continued bank consolidation
o Continued growth of non-bank
processors
o Convergence of value chains,
bringing disparate industries into
competition
o Technology sophistication
o Anytime/ anywhere
expectations
o Speed/cost value proposition
o Privacy sensitivities
Commercial
Customer
Trends
o Price/value sensitivity
o Enhanced information
o Fraud/risk management
Framework for Delivery to State
Governments
A
Integrated e-ticketing
B
Bus
C
Passenger
information
25% Off
Vision 2020
A Virtuous Circle
Benefits
Tax
Tax
Benefits
Benefits
Tax
electronic payments and economic growth build on each other to form an
ongoing virtuous circle. One that can sustain long term economic development.
Card Payments
Vision 2020
Nigeria to become
one of 20 largest
economies in the
world by year 2020.
Economic
Performance
National Payment System Reforms
Continuing to Strengthen Public
institutions for transparency
Efficiency
Technology
E- Payments are critical in
facilitating the growth process.
Capital
Formation
Accumulation
Savings
Investments
People into formal Sector
Credit Expansion
Productive Economic
Resources
It is in the economic interests of all countries
that wish to participate in the global economy
to encourage the
development of
more efficient systems.
Deposit Multiplier
Deposit Expansion
Increase in GDP Growth
Vision 2020
How can I drive
e-payment Adoption ?
(Financial Sector)
14
Poor Uptake
Yet, despite millions in potential
savings, post tax benefits etc
consumer uptake remains marginal.
Why is this?
Web payments are grossly impersonal
Often requesting intimate details such as the
individual's card number, address, telephone number
This sole action puts many people off.
Trust
The simple fact is that people trust people, not
computers.
Money motivates crime, divorce proceedings,
sibling rivalries, murder and even war. People's
money is not a thing to be trifled with.
For this, many want the assurance of dealing
with a human being trained to assure that
everything goes correctly
Trust enablement and education are the keys to
driving consumer adoption
Increase Trust
How can banks, and financial transfer
institutions cultivate a bond of personal
trust needed to increase mainstream
consumer adoption of electronic
payments?
Reputation Systems
Feedback Forum: Remember the 5 stars ?
eBay, the predominant online auction house,
•Buyer and seller have an opportunity to rate each other.
•Rating can either comfort or alert a potential seller or buyer
•The Forum enables usage and purchasing decisions
For Banks:
Rate transactions on ATMS.
Collect positive data start customer campaigns on the performance of your
ATM services
Offer 24hour arbitatration
Stand out
Develop trust
Trust the interface
Trust the Interface: Remember Mafia wars, Avatar, ok Spiderman, Superman ???
MIT Gestures and Narrative lab. are embarking on a study (1)
• Verbal voice over do not necessarily engender more trust, but virtual people do.
• Mimic human conversational techniques and non; verbal gaze, gestures to
increase trust and create a believable human interface - embodied conversational
agents (ECAs).“
• Early results show that "in a myriad of subtle ways, users felt heard and as if the
technology was adapting to them rather than the other way around." This
mechanism can potentially be used to educate, advise and market to consumers.
Trust the Process PAINfully.
Privacy : Limits knowledge of a transaction's content to only those having a need to
know.
Authentication: Authenticate all users in the value chain. In the real world, mutual
trust is established through
a variety of familiar tokens and rituals (e.g., driver's licenses, familiar "face and place"
settings, etc.), but the
Internet offers card readers and one time only passwords use them.
Integrity: Ensure that the transaction has not been altered (except where specifically
allowed) by those
involved, by third-party attackers or by system errors 3 DES securtity, Site Verification
etc.
Non-repudiation: Prohibit disclaimers
Where Man Meets Technology
If consumers and businesses do not trust
or feel comfortable with exchanging or
moving money over e-payment systems,
they won't do it. ]
To trust the process and the interface you
need….
•Added security
•Fault tolerant Hardware
•Continuos Availability
•Robust Operating systems
•Databases that support high volume
transactions
•Value added Services
Everybody can’t change everything
But
Everybody can change something
What will you change ?
22
Thank You
23